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Dec 27 2011

‘Planned 49% limit’ for NHS private patients in England

Mention of the NHS seems to result in a serious outbreak of irrationality amongst the commentariat, this week it’s because the new Health and Social Care Bill with contain a cap of 49% on the fraction of income an NHS hospital can earn from private patients (BBC news here). Clearly this represents end-times, privatisation of the NHS etc etc…

Currently most hospitals are limited to a cap of 2% income from private patients, although a quick search shows that the Royal Marsden already gets 26% (source), Christies 6% (source), Papworth 4.5% (source). These are not hospitals renowned for poor service to NHS patients.

The key point here is that 49% is a cap, not a target. Since only 8% of the UK population has private health insurance, amounting to 14% of health expenditure (source) it’s very difficult to see how NHS hospitals as a whole will reach anything like 49% of income from private patients. The current situation must be that private patients are largely (lets say 90%) serviced by entirely private hospitals – NHS hospitals will only pick up that trade if they offer something better. The area they will offer something better is in specialist care – which isn’t viable for a private system serving less than 10% of the population. The limit case is that NHS hospitals would get 14% of income from private patients and the private hospital sector would disappear, clearly this isn’t going to happen.

Private patients in the NHS wouldn’t be displacing publicly-funded patients from beds, if that were all they were doing then what would be the point for the patient? To get private patients an NHS hospital would need to build (or convert) private “wards”, this is what hospitals like the Royal Marsden do already. To do this they’d need a fair expectation that they could attract the custom otherwise they’d simply end up poorer.

I’ve had private medical care – I liked it a lot, I wish everyone could have it. The benefits I received were in getting rapid treatment for a non-emergency condition, having my own room for the run-up and post-operation and having consultations in a slightly more pleasant environment. As a family (unborn included) we continue to use the NHS for most of our medical care. As someone with private health insurance, I get to pay twice for some of my health care – I pay for NHS treatment which I don’t use, then I pay again for private treatment. I don’t resent this, I do resent the idea that my private care must be entirely separate from any public provision that is available – in that case why can’t I withdraw my contribution to the public system?

The figures on health expenditure in the private sector give some idea of the potential funding gap for the NHS – what we’d need to pay for a gold-plated NHS where, for example, there were no waiting lists and we all had private rooms (if that was medically appropriate). Currently the NHS gets £106billion per year, equivalent to 25p basic rate tax. Private health insurance appears to cost about 1.75 times as much per head therefore a crude estimate is a gold-plated NHS would cost  £185bn or 46p basic rate tax. This would put us at a level of spending that is equivalent to Switzerland and only exceeded by the US (source). It’s possible that you could do it for rather less but not if every attempt to change anything in the NHS is met by a hysterical and apocalyptic knee-jerk response. The important thing is patient care, not the institution that provides it. Providing a healthcare system isn’t simply a choice between the NHS or US-style system, you can see the range of systems here.

And before we get hoity-toity about people paying directly for health care – all the NHS does is launder the process of paying for health care. We pay tax to the government, the government funds the NHS – it isn’t some vast charity run on goodwill. Consultants and doctors in the NHS are really paid quite well, and in my experience individual consultants are working for both public and private sectors at the same time. It is rather offensive to the wide range of people in the private sector service industries to imply that the service they provide is somehow inferior because they are paid by the customer, not by the government.

Update

More on this at NHS Vault (here), definitely worth reading.

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